E-Rate Funding Still Up in the Air

Schools, libraries are left in the dark about discounted funds for Internet service

By Debra Lau Whelan -- School Library Journal, 11/1/2004

It looks like most schools and libraries won't know how much e-rate funding they're getting in 2004 until the end of November—at the earliest. As a result, school districts and public libraries will have to postpone paying telephone and Internet bills or be forced to take money from other areas of their budgets, says Bob Bocher, chair of the American Library Association's E-rate Task Force.

"It's still the status quo," says Bocher, who is also a technology consultant at the Wisconsin Department of Public Institution. "No commitment letters are going out, and there's still no word from the Federal Communications Commission (FCC) on when the funding will start."

Public libraries and schools nationwide suddenly stopped receiving new e-rate grants on August 3, following a decision by the FCC, in consultation with the White House, to impose tighter spending rules, which, FCC officials say will make it easier to detect waste and fraud in the program (see "FCC Adopts New E-rate Rules," June 2003, p. 22). Under new accounting requirements, the Universal Service Administrative Company (USAC), the nonprofit group that runs the program under the FCC's oversight, may only commit funds it has on hand. In the past, USAC issued commitment letters in advance, with the knowledge that it would receive its full $2.25 billion in funding over the course of the year.

No schools or libraries have been left without Internet service as yet, but the cash-flow problem has caused hardships for e-rate recipients who rely on the federal program for discounted Internet and telecommunications service. "If this moratorium drags on, then it's going to be a serious problem," says Bocher. "Schools in high-poverty areas will find it more difficult to locate funding for their e-rate services."

About 90 percent of schools and libraries in Wisconsin receive e-rate funding, and up to 70 percent of recipients in Wisconsin, Pennsylvania, and Missouri were lucky enough to receive commitment letters before the August 3 moratorium, says Julie Tritt Schell, Pennsylvania's e-rate coordinator. Other states such as Utah, Oregon, and Virginia were less fortunate—as many as 80 percent of schools and libraries there have no idea when they'll receive funding. By December, USAC is expected to have more than $1 billion in applications awaiting approval letters.

During an October 5 Congressional hearing on the subject, Senate Commerce Committee Chairman Senator John McCain (R-AZ) expressed irritation that Congress had not been notified about the suspension of the program and inquired about steps that were being taken to monitor the program in light of allegations of fraud involving telephone companies and equipment makers.